CONSOLIDATED DIRECTORS’ REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 2015
In ancient Greek drama, an apparently insoluble crisis was often
solved by the intervention of the gods who magically descended
onto the stage from the skies above.
The elaborate crane mechanisms that enabled this impressive
effect were known as aeorema.
Aeorema Communications Plc, Moray House, 23-31 Great Titchfield Street, London, W1W 7PA
Aeorema_Cover_2015.indd 1
27/10/2015 13:19
Contents
Overview
Chairman’s statement
Strategic report
Directors’ report
Independent auditors’ report
Consolidated statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the consolidated financial statements
Notice of Annual General Meeting
Company information
2
3
4 – 5
6 – 8
9 – 10
11
12
13 – 14
15
16 – 36
37 – 38
39
1
Aeorema Communications plc
Aeorema Communications plc, the AIM-traded live events agency, announces its results for the year ended 30 June
2015.
Overview
(cid:129) Profits before tax from continuing operations to £383,216 (2014: £504,841)
(cid:129) Revenues of £4,934,560 (2014: £4,764,584)
(cid:129) Cash at bank and in hand of £1,558,453 (2014: £1,620,895)
(cid:129) Recommend dividend payment of 3p (2014: 2p)
2
2
Chairman’s Statement
During the year, Aeorema reinforced its position as a leading provider of live events under the single brand, Cheerful
Twentyfirst, and navigated through a competitive market to return a profit in excess of the trading update on profits
issued to the market in May 2015. The year also saw us investing in a new website, developing a stronger single brand,
creating a highly visible social media presence, and completing the refurbishment of our new offices to allow for future
growth.
Our ability to respond and adapt our offering in a competitive, rapidly evolving market has enabled us to attract new
clients and further develop our relationships with existing clients. We work with senior leaders of forward-thinking
brands who value innovation and want to take live communication to the next level, which is where we excel. Year-on-
year, our talented team produces original, outstanding work for these clients, resulting in several nominations at
prestigious award events. These include nominations for work completed on behalf of two internationally renowned
companies, further highlighting the excellent reputation that we have built in the space.
Our focus on delivering creative live events, incorporating superb screen content and award-winning video, naturally
attracts leading people to our team. During the year and as part of our growth strategy, we recruited several new team
members to focus on new business development and strengthen our capabilities in design and content. These
appointments will each be pivotal in supporting our growth in the year ahead.
The results for the year show a profit before taxation from continuing operations of £383,216 (2014: £504,841) on
revenue of £4,934,560 (2014: £4,764,584). We remain cash positive with cash at bank and in hand of £1,558,453
(2014: £1,620,895).
The Board is proposing a dividend of 3 pence per share (2014: 2 pence per share) to be paid to shareholders on the
register on 6 November 2015. The ex-dividend date will be on 5 November 2015. Subject to the proposed dividend
being approved by the shareholders, it will be paid on 27 November 2015.
Looking ahead, the market is extremely competitive and, as has been the custom over the last few years, we anticipate
the second half of the year to contribute the greater part of both turnover and profitability. Investors should be assured
that our brand is gaining recognition and we are carving out a niche position in the sector, which we believe will yield
positive longer term results.
On behalf of the board, I would like to thank our team for their work during the past year as well as our shareholders for
their continued support.
M Hale
Chairman
20 October 2015
3
3
Strategic Report
For the year ended 30 June 2015
The directors present their Strategic Report on the Group for the year ended 30 June 2015.
Principal activities
Aeorema is a live events agency with film capabilities that specialises in devising and delivering corporate
communication solutions.
Business review
The results for the year show a profit before taxation from continuing operations of £383,216 (2014: £504,841). It is
proposed that the retained profit after taxation of £315,237 (2014: £415,696) is transferred to the Group's reserves.
Revenue for the year from continuing operations was £4,934,560 (2014: £4,764,584). The gross profit remained
consistent at 39% (2014: 41%) and gross profit from continuing operations was £1,916,926 (2014: £1,969,955).
Key Financial Highlights
Year
Continuing operations
Revenue
2015
£
2014
£
2013
£
2012
£
4,934,560
4,764,584
3,992,751
2,837,345
Profit before taxation, impairment losses
and write off of development costs
383,216
504,841
358,864
41,399
Further information can be found within the Chairman's Statement on pages 4 to 5.
Capital Expenditure
Total capital expenditure, including expenditure on tangible assets, was £43,785 compared with £44,462 last year.
Cashflows
Net cash inflow from operating activities was £383,894 compared with a net cash inflow of £109,225 for the year ended
30 June 2014, due to a decrease in trade receivables as a result of quicker payment. Total cashflow, representing
operating cashflow after taxation, interest, capital expenditure and financing activities, decreased by £62,442 compared
with an increase of £39,105 last year. The cash position at the end of the year was £1,558,453 compared with
£1,620,895 at the end of the prior year. The group had net assets of £1,884,040 at the end of the year (2014:
£1,967,231) and net current assets of £1,447,347 (2014: £1,510,483).
Employees
Our priority is to attract and retain talented employees and to harness their creativity to drive growth through
development and delivery of services that bring value to our customers' business operations.
We continue to focus on ensuring that the performance of staff is measured against clear, business focused objectives
and behavioural criteria through continual appraisals.
4
Strategic Report continued
For the year ended 30 June 2015
Reward
The Group benchmarks employee salaries against the market and reviews salaries annually to ensure that we are
paying at a level to attract and retain high-quality employees.
Key employees are offered access to a share option scheme, further details of which are provided in note 22 to the
financial statements.
Equal Opportunities
We are committed to ensuring equal opportunities for our staff. We have introduced training which covers equal
opportunities legislation and best practice. Our policy in respect of employment of disabled persons is the same as that
relating to all other employees in matters of training, career development and promotion. Where employees become
disabled during the course of their employment, we make every effort to make reasonable adjustments to their working
environment to enable their continued employment.
Safety, Health and Environment
The commitment and participation of all employees is vital to efficient and effective occupational risk control. In order to
meet our responsibility to protect the environment, staff and the business, the Group continues to focus on maintaining
a risk aware culture.
We believe the Group maintains a low environmental impact. We therefore continue to work on the potential
environmental impacts of energy consumption, waste and travel.
Directors' Policies for Managing Principal Risks
There is an ongoing process for identifying, evaluating and managing the significant risks faced by the business. Risk
reviews are undertaken regularly by the respective business areas throughout the year to identify and assess the key
risks associated with the achievement of our business objective.
Key risks of a financial nature
The principal risks and uncertainties facing the Group are with customer dependency. Though the Group has a very
diverse customer base in certain market sectors, key customers can represent a significant amount of revenue. Key
customer relationships are closely monitored but the loss of a key client could have adverse effect on the Group’s
performance. Further details of risks, uncertainties and financial instruments are contained in note 25.
Key risks of non-financial nature
The Group is operating in a highly competitive global market that is undergoing continual change. The Group’s ability to
respond to many competitive factors including, but not limited to technological innovations, product quality, customer
service and employment of qualified personnel will be key in the achievement of its objectives, but its ultimate success
will depend on the purchase spends of its customers and the buoyancy in the market.
On behalf of the Board
S Garbutta
Director
20 October 2015
5
Directors’ Report
For the year ended 30 June 2015
The directors present their annual report and financial statements for the year ended 30 June 2015. The financial
statements are for Aeorema Communications plc (“the Company”) and its subsidiaries (together, “the Group”).
In accordance with section 414C of the Companies Act 2006, the company has produced a Strategic Report which is
set out on pages 4 to 5.
Directors
The following directors have held office since 1 July 2014:
P Litten
R Owen
S Garbutta
M Hale
G Fitzpatrick
S Quah
In accordance with regulation 122 of the Company's Articles of Association, one third of the directors retire by rotation,
or if their number is not three, or a multiple of three, the nearest to but not exceeding one third, and, being eligible, offer
themselves for re-election.
Dividends
The Board is proposing a dividend of 3 pence per share to be paid on 27 November 2015 to shareholders on the
register on 6 November 2015. The ex-dividend date for the final dividend will be 5 November 2015.
Financial instruments
Details of financial instruments are given in note 25 to the accounts.
Non-current assets
The significant changes in non-current assets during the year are explained in notes 9, 10 and 11 to the financial
statements. As pioneers in visual technologies, the Group has utilised its resources to develop unique and highly
innovative communications products.
Shareholdings
At 30 September 2015, the directors were aware that the following were the beneficial owners of 3% or more of the
Company's issued share capital:
P Litten
M Hale
S Quah
B Smith
Number of shares
Percentages held
3,362,500
1,725,000
300,000
300,000
37.2
19.1
3.3
3.3
As civil partner of P Litten, G Fitzpatrick has a beneficial interest in 3,426,500 ordinary shares.
6
Directors’ Report continued
For the year ended 30 June 2015
Corporate governance
Although not required to do so, the Company seeks within the practical confines of being a small company to have
regard to the principles of good governance and the UK Corporate Governance Code (“The Code") appended to the
Listing Rules of the Financial Services Authority.
The Board
The aim of the Board is to function at the head of the Company's management structures, leading and controlling its
activities and setting a strategy for enhancing shareholder value. The Board currently consists of three executive
directors and three non-executive directors. The Company does not have a Nomination Committee as such; the Board
collectively undertakes the functions of such a committee.
Future developments
Refer to the Chairman’s Statement for more information on future developments.
Internal control
The Board has overall responsibility for ensuring that the Group maintains systems and internal financial controls that
provide them with reasonable assurance regarding the financial information both for use within the business and for
external publication and that the assets are safeguarded.
Audit Committee
There is an Audit Committee consisting of the Chairman, and a non-executive director. The terms of reference of the
Audit Committee are to assist the Board in the discharge of its responsibilities for corporate governance, financial
reporting and internal control. Its duties include maintaining an appropriate relationship with the Company's auditors,
keeping under review the scope and the results of the audit and its effectiveness.
Remuneration Committee
The Remuneration Committee consists of two non-executive directors, Stephen Garbutta and Michael Hale, and a
meeting will be held no less than once a year. The Remuneration Committee is responsible for reviewing the
performance of the executives of the Company and for setting the scale and structure of their remuneration, paying due
regard to the interests of shareholders as a whole and the performance of the Company.
Going concern
After making appropriate enquiries, the directors have a reasonable expectation that the Group and the Company have
adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to
adopt the going concern basis in preparing the Group's financial statements.
Statement of disclosure to auditor
So far as the directors are aware, there is no relevant audit information of which the Company's auditors are unaware.
Additionally, they have taken all the necessary steps that they ought to have taken as directors in order to make
themselves aware of all the relevant audit information and to establish that the Company's auditors are aware of that
information.
A resolution to reappoint Baker Tilly UK Audit LLP, whose name will change on 26 October 2015 to RSM UK Audit LLP,
as auditor for the ensuing year will be proposed at the forthcoming annual general meeting.
7
Directors’ Report continued
For the year ended 30 June 2015
Directors' responsibilities
The directors are responsible for preparing the Strategic Report and the Directors’ Report, and the financial statements
in accordance with applicable law and regulations.
Company law requires the directors to prepare group and company financial statements for each financial year. The
directors are required by the AIM Rules of the London Stock Exchange to prepare group financial statements in
accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union (“EU”) and
have elected under company law to prepare the company financial statements in accordance with IFRS as adopted by
the EU.
The financial statements are required by law and IFRS adopted by the EU to present fairly the financial position of the
group and the company and the financial performance of the group and the company. The Companies Act 2006
provides in relation to such financial statements that references in the relevant part of that Act to financial statements
giving a true and fair view are references to their achieving a fair presentation.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the group and the company and of the profit or loss of the group and the
company for that period.
In preparing the group and company financial statements, the directors are required to:-
– select suitable accounting policies and then apply them consistently;
– make judgements and accounting estimates that are reasonable and prudent;
– state whether they have been prepared in accordance with IFRSs adopted by the EU;
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group
and the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
group and the company and enable them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Aeorema Communications plc website.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
On behalf of the Board
S Garbutta
Director
20 October 2015
8
Independent Auditors’ Report
To the Members of Aeorema Communications plc
We have audited the Group and Parent Company financial statements (“the financial statements”) on pages 11 to 36.
The financial reporting framework that has been applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company
financial statements, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As more fully explained in the Directors’ Responsibilities Statement set out on page 8, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s
(APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at
http://www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion
(cid:129) the financial statements give a true and fair view of the state of the Group’s and the Parent’s affairs as at 30 June
2015 and of the Group’s profit for the year then ended;
(cid:129) the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union
(cid:129) the Parent’s financial statements have been properly prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the Companies Act 2006; and
(cid:129) the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
9
Independent Auditors’ Report continued
To the shareholders of Aeorema Communications plc
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you
if, in our opinion:
(cid:129) adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have
not been received from branches not visited by us; or
(cid:129) the Parent Company financial statements are not in agreement with the accounting records and returns; or
(cid:129) certain disclosures of directors’ remuneration specified by law are not made; or
(cid:129) we have not received all the information and explanations we require for our audit.
Ian Hughes (Senior Statutory Auditor)
For and on behalf of Baker Tilly UK Audit LLP, Statutory Auditor
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
20 October 2015
10
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2015
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating Profit
Finance income
Profit before taxation
Taxation
Profit and total comprehensive income for the year
attributable to owners of the parent
Profit per ordinary share:
Total basic earnings per share
Total diluted earnings per share
Notes
2015
£
2014
£
2
3
4
5
8
8
4,934,560
(3,017,634)
1,916,926
(1,534,471)
382,455
761
383,216
(67,979)
4,764,584
(2,794,629)
1,969,955
(1,465,520)
504,435
406
504,841
(89,145)
315,237
415,696
3.51904p
3.37134p
5.02290p
4.55487p
There were no other comprehensive income items.
The notes on pages 16 to 36 are an integral part of these financial statements.
11
Statement of Financial Position
As at 30 June 2015
Notes
Group
Company
2015
£
2014
£
2015
£
2014
£
Non-current assets
Intangible assets
Property, plant and equipment
Deferred taxation
Investments in subsidiaries
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
9
10
6
11
12
13
365,154
365,154
65,135
6,404
–
67,449
24,145
–
–
–
–
–
–
–
568,080
553,196
436,693
456,748
568,080
553,196
–
2,674
–
–
1,352,398
1,475,921
328,135
357,873
1,558,453
1,620,895
657,873
734,628
2,910,851
3,099,490
986,008
1,092,501
3,347,544
3,556,238
1,554,088
1,645,697
Trade and other payables
14
(1,463,504)
(1,589,007)
(86,105)
(89,730)
Net assets
Equity
Share capital
Share premium
Merger reserve
Other reserve
Share-based payment reserve
Capital redemption reserve
Retained earnings
1,884,040
1,967,231
1,467,983
1,555,967
15
16
17
18
1,131,313
1,079,688
1,131,313
1,079,688
7,063
16,650
–
–
–
16,650
19,500
110,972
7,063
16,650
–
–
–
16,650
19,500
110,972
257,812
257,812
257,812
257,812
471,202
482,609
55,145
71,345
Equity attributable to owners of the parent
1,884,040
1,967,231
1,467,983
1,555,967
The notes on pages 16 to 36 are an integral part of these financial statements.
The financial statements were approved and authorised by the board of directors on 20 October 2015 and were signed
on its behalf by
G Fitzpatrick, Director
S Garbutta, Director
Company Registration No. 04314540
12
Statement of Changes in Equity
For the year ended 30 June 2015
Group
Share
Share Merger
capital premium reserve
£
£
£
Share-
based
payment
reserve
£
Other
reserve
£
Capital
redemption Retained
earnings
£
reserve
£
Total
equity
£
96,083
257,812 125,883 1,501,116
At 1 July 2013
1,004,688
– 16,650
Profit and total comprehensive
income for the year, net of tax
Tax credit relating to
share option scheme
Dividends paid
–
–
–
Shares issued in the period/
to be issued
Share-based payments
75,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19,500
–
–
–
–
–
14,889
At 30 June 2014
1,079,688
– 16,650
19,500 110,972
257,812 482,609 1,967,231
At 1 July 2014
1,079,688
– 16,650
19,500 110,972
257,812 482,609 1,967,231
Profit and total comprehensive
income for the year, net of tax
Dividends paid
–
–
–
–
–
–
–
–
Shares issued in the period
51,625
7,063
– (19,500)
–
–
–
Share-based payments
Transfer
–
–
–
–
–
–
–
14,884
– (125,856)
– 125,856
–
At 30 June 2015
1,131,313
7,063 16,650
–
–
257,812 471,202 1,884,040
The notes on pages 16 to 36 are an integral part of these financial statements.
13
– 415,696
415,696
–
61,594
61,594
– (120,564)
(120,564)
–
–
–
–
94,500
14,889
– 315,237
315,237
– (452,500)
(452,500)
–
–
–
–
39,188
14,884
Statement of Changes in Equity continued
For the year ended 30 June 2015
Group
Share
Share Merger
capital premium reserve
£
£
£
Share-
based
payment
reserve
£
Other
reserve
£
Capital
redemption Retained
earnings
£
reserve
£
Total
equity
£
96,083
257,812 132,235 1,507,468
At 1 July 2013
1,004,688
– 16,650
Comprehensive income
for the year, net of tax
Dividends paid
Shares issued in the period/
to be issued
Share-based payments
–
–
75,000
–
–
–
–
–
–
–
–
–
–
–
19,500
–
–
–
–
14,889
At 30 June 2014
1,079,688
– 16,650
19,500 110,972
257,812
71,345 1,555,967
At 1 July 2014
1,079,688
– 16,650
19,500 110,972
257,812
71,345 1,555,967
Comprehensive income
for the year, net of tax
Dividends paid
–
–
–
–
–
–
–
–
Shares issued in the period
51,625
7,063
– (19,500)
–
–
–
–
59,674
59,674
– (120,564)
(120,564)
–
–
–
–
94,500
14,889
– 310,444
310,444
– (452,500)
(452,500)
–
–
–
–
39,188
14,884
Share-based payments
Transfer
–
–
–
–
–
–
–
14,884
– (125,856)
– 125,856
–
At 30 June 2015
1,131,313
7,063 16,650
–
–
257,812
55,145 1,467,983
The notes on pages 16 to 36 are an integral part of these financial statements.
14
Statement of Cash Flows
For the year ended 30 June 2015
Net cash flow from operating activities
24
383,894
109,225
(63,711)
(152,338)
Notes
Group
Company
2015
£
2014
£
2015
£
2014
£
Cash flows from investing activities
Finance income
761
406
268
250
Purchase of property, plant and equipment
10
(43,785)
(44,462)
Proceeds from sale of property, plant and equipment
10,000
Dividends received by the Company
–
–
–
–
–
–
–
400,000
130,000
Cash (used) / generated in investing activities
(33,024)
(44,056)
400,268
130,250
Cash flows from financing activities
Proceeds of share issue
39,188
94,500
39,188
94,500
Dividends paid to owners of the Company
(452,500)
(120,564)
(452,500)
(120,564)
Cash used in financing activities
(413,312)
(26,064)
(413,312)
(26,064)
Net (decrease) / increase in cash and cash equivalents
(62,442)
39,105
(76,755)
(48,152)
Cash and cash equivalents at beginning of year
1,620,895
1,581,790
734,628
782,780
Cash and cash equivalents at end of year
13
1,558,453
1,620,895
657,873
734,628
The notes on pages 16 to 36 are an integral part of these financial statements.
15
Notes to the Consolidated Financial Statements
For the year ended 30 June 2015
1
Accounting policies
Aeorema Communications plc is a public limited company incorporated in the United Kingdom. The Company is
domiciled in the United Kingdom and its principal place of business is Moray House, 23/31 Great Titchfield
Street, London W1W 7PA. The Company’s Ordinary Shares are traded on the AIM Market.
The principal accounting policies adopted in the preparation of the financial statements are set out below. The
policies have been consistently applied to all the years presented, unless otherwise stated.
Going concern
The Group’s business activities, together with the factors likely to affect its future development and performance
are set out in the review of business contained in the Chairman’s Statement. The Group’s financial statements
show details of its financial position including, in note 25, details of its financial instruments and exposure to risk.
After reviewing the Group’s budget for the next financial year, other medium term plans and considering the risks
outlined in note 25, the Directors, at the time of approving the financial statements, have a reasonable expectation
that the Group has adequate resources to continue in operational existence for the foreseeable future and have
therefore used the going concern basis in preparing the financial statements.
Basis of Preparation
The Group’s financial statements have been prepared under the historical cost convention and in accordance
with International Financial Reporting Standards (IFRS) as adopted by the European Union, and with those parts
of the Companies Act 2006 applicable to companies reporting under IFRS.
The following new standards, amendments to standards and interpretations, applied for the first time from 1 July
2014.
(cid:129) IFRS 2 (Amended) ‘Share-Based Payments’, effective 1 July 2014.
(cid:129) IFRS 3 (Amended) ‘Business Combinations’, effective 1 July 2014.
(cid:129) IFRS 8 (Amended) ‘Operating Segments’, effective 1 July 2014.
(cid:129) IFRS 11 (Amended) ‘Accounting for Acquisitions of Interests in Joint Operations’, effective 1 July 2016.
(cid:129) IAS 16 (Amended) ‘Property, Plant and Equipment’, effective 1 July 2014.
(cid:129) IAS 19 (Amended) ‘Employee Benefits’, effective 1 July 2014
(cid:129) IAS 24 (Amended) ‘Related Party Disclosures’, effective 1 July 2014.
(cid:129) IAS 38 (Amended) ‘Intangible Assets’, effective 1 July 2014.
(cid:129) IAS 32 (Amended) ‘Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities’,
effective 1 January 2014.
(cid:129) IAS 36 (Amended) ‘Recoverable Amounts Disclosures for Non-Financial Assets’, effective 1 January 2014.
(cid:129) IAS 39 (Amended) ‘Novation of Derivatives and Continuation of Hedge Accounting’, effective 1 January 2014.
(cid:129) IAS 40 (Amended) ‘Investment Property’, effective 1 January 2014.
(cid:129) IFRIC Interpretation 21 ‘Levies’, effective 1 January 2014.
The adoption of these revised and amended standards has not impacted on the Annual Report and Financial
Statements.
16
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
1
Accounting policies continued
Adopted IFRSs not yet applied
The following new standards, amendments to standards and interpretations have been issued, but are not
effective for the financial year beginning 1 July 2014 and have not been adopted early by the Group:
(cid:129) IFRS 9 ‘Financial Instruments’, effective 1 January 2018.
(cid:129) IFRS 14 ‘Regulatory Deferral Accounts’, effective 1 July 2016.
(cid:129) IFRS 15 ‘Revenue for Contracts with Customers’, effective 1 January 2018.
(cid:129) IFRS 10, IFRS 12 and IAS 28 (Amended): ‘Investment Entities: Applying the Consolidation Exception’,
effective 1 January 2016.
(cid:129) IAS 1 (Amended), ‘Disclosure Initiative’, effective 1 January 2016.
(cid:129) Annual improvements to IFRS’s 2012-2014 Cycle, effective 1 January 2016.
(cid:129) IFRS 10 and IAS 28 (Amended): ‘Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture’, effective 1 January 2016.
(cid:129) IAS 27 (Amended), ‘Equity Method in Separate Financial Statements’, effective 1 January 2016.
(cid:129) IAS 16 and IAS 41 (Amended), ‘Bearer Plants’, effective 1 January 2016.
(cid:129) IAS 16 and IAS 38 (Amended), ‘Clarification of Acceptable Methods of Depreciation and Amortisation’
effective 1 January 2016.
(cid:129) IFRS 11 (Amended), ‘Accounting for Acquisitions of Interests in Joint Operations, effective 1 January 2016.
Management does not currently anticipate that the application of these standards, where applicable, will have an
impact on the financial statements, except for the requirement of additional disclosures.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its subsidiary undertakings drawn up
to 30 June 2015. Subsidiaries are all entities (including structured entities) over which the group has control.
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are
deconsolidated from the date that control ceases.
Intra-group transactions, balances and unrealised gains and losses on transactions between group companies are
eliminated.
The merger reserve is used where more than 90% of the shares in a subsidiary are acquired and the
consideration includes the issue of new shares by the Company, thereby attracting merger relief under the
Companies Act 2006.
Revenue
Revenue represents amounts (excluding value added tax) derived from the provision of services to third party
customers in the course of the Group’s ordinary activities. Revenue is measured at the fair value of consideration
received taking into account any trade discounts and volume rebates. Revenue for all business segments is
recognised when the Group has earned the right to receive consideration for its services.
17
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
1
Accounting policies continued
Intangible assets – goodwill
All business combinations are accounted for by applying the acquisition method. Goodwill acquired represents
the excess of the fair value of the consideration and associated costs over the fair value of the identifiable net
assets acquired.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. At the date of
acquisition, the goodwill is allocated to cash generating units, usually at business segment level or statutory
company level as the case may be, for the purpose of impairment testing and is tested at least annually for
impairment. On subsequent disposal or termination of a business acquired, the profit or loss on termination is
calculated after charging the carrying value of any related goodwill.
Property, plant and equipment
Property, plant and equipment is stated in the financial statements at cost less accumulated depreciation and any
impairment value. Depreciation is provided to write off the cost less estimated residual value of property, plant and
equipment over its expected useful life (which is reviewed at least at each financial year end), as follows:
Leasehold land and buildings
straight line over the life of the lease (3 years)
Fixtures, fittings and equipment
25% straight line
Any gain or loss arising on the derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in the Statement of Comprehensive Income in the
year that the asset is derecognised.
Fully depreciated assets still in use are retained in the financial statements.
Impairment
The carrying amounts of the Group’s assets are reviewed at each period end to determine whether there is any
indication of impairment. If any such indication exists, the assets’ recoverable amount is estimated. For goodwill
and intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the
recoverable amount is estimated at each annual period end date and whenever there is an indication of
impairment.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds
its recoverable amount. Impairment losses are recognised in the Statement of Comprehensive Income in those
expense categories consistent with the function of the impaired asset.
Operating leases
Rentals under operating leases are charged to the Statement of Comprehensive Income on a straight line basis
over the period of the lease.
Investments
Fixed asset investments are stated at cost less provision for diminution in value.
18
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
1
Accounting policies continued
Inventories
Inventories are stated at the lower of cost and net realisable value.
Trade and other receivables
Trade and other receivables are stated initially at fair value and subsequently measured at amortised cost less any
provision for impairment.
Trade and other payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost.
Cash and cash equivalents
Cash comprises, for the purpose of the Statement of Cash Flows, of cash in hand and deposits payable on
demand. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts
of cash and that are subject to an insignificant risk of changes in value. Cash equivalents normally have a date of
maturity of 3 months or less from the acquisition date.
Finance income
Financial income consists of interest receivable on funds invested. It is recognised in the Statement of
Comprehensive Income as it accrues.
Taxation
Income tax on the profit or loss for the periods presented comprises current and deferred tax. Current tax is the
expected tax payable on the taxable income for the year, using rates enacted or substantively enacted at the end
of the reporting period, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. The following temporary differences are not
provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither
accounting nor taxable profit other than in a business combination; the differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the end of the reporting period.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the assets can be utilised. Deferred tax assets and liabilities are not discounted.
Pension costs
The Group does not operate a pension scheme for its employees. It does however, make contributions to the
private pension arrangements of certain employees. These arrangements are of the money purchase type and the
amount charged to the Statement of Comprehensive Income represents the contributions payable by the Group
for the period.
19
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
1
Accounting policies continued
Financial instruments
The Group does not enter into derivative transactions and does not trade in financial instruments. Financial assets
and liabilities are recognised on the Statement of Financial Position when the Group becomes a party to the
contractual provision of the instrument.
Equity
An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. The Group’s
equity instruments comprise ‘share capital’ in the Statement of Financial Position.
Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rates of
exchange ruling at the end of the reporting period. Transactions in foreign currencies are recorded at the rate
ruling at the date of the transaction. All differences are taken to the Statement of Comprehensive Income.
Share-based awards
The Group issues equity settled payments to certain employees. Equity settled share based payments are
measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant.
The fair value is estimated using option pricing models and is dependent on factors such as the exercise price,
expected volatility, option price and risk free interest rate. The fair value is then amortised through the Statement
of Comprehensive Income on a straight-line basis over the vesting period. Expected volatility is determined based
on the historical share price volatility for the Company. Further information is given in note 22 to the financial
statements.
Significant judgements and estimates
The preparation of the Group’s financial statements in conforming with IFRS required management to make
judgements, estimates and assumptions that effect the application of policies and reported amounts in the
financial statements. These judgements and estimates are based on management’s best knowledge of the
relevant facts and circumstances. Information about such judgements and estimation is contained in the
accounting policies and / or notes to the financial statements and the key areas are summarised below:
a) Depreciation rates are based on the estimated useful lives and residual value of the assets involved.
b) The impairment review of goodwill is based on the estimation of future cash flows and discount rates in order
to calculate the present value of the cash flows.
c) The Group operates share incentive schemes as detailed in note 22. In order to calculate the annual charge in
accordance with IFRS 2, management are required to make a number of assumptions and include, amongst
others, volatility and expected life of options.
d) An allowance for uncollectable trade receivables is estimated based on a combination of aging analysis and
any specific, known troubled customer accounts.
e) An allowance for dilapidations is estimated based on a total value of works to restore the property to its original
condition at the end of the lease.
20
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
2
Revenue and segment information
The Company uses several factors in identifying and analysing reportable segments, including the basis of
organisation, such as differences in products and geographical areas. The Board of Directors, being the Chief
Operating Decision Makers, have determined that for the period ending 30 June 2015 there is only a single
reportable segment.
All revenue represents sales to external customers. Three customers (2014: three) are defined as major
customers by revenue, contributing more than 10% of the Group revenue.
Customer one
Customer two
Customer three
Major customers
2015
£
1,320,762
632,892
581,546
2014
£
1,214,324
571,188
809,290
2,535,200
2,594,802
The geographical analysis of revenue from continuing operations by geographical location of customer is as
follows:
Geographical market
2015
2014
2015
2014
UK
£
UK
£
Europe
£
Europe
£
2015
2014
Rest of Rest of
the
World World
£
the
£
2015
2014
Total
£
Total
£
Revenue
4,479,022 4,493,297 391,519 262,306 64,019
8,981 4,934,560 4,764,584
All non-current assets are based in the UK.
21
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
3
Operating profit
Operating profit is stated after charging
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Fees payable to the Company’s auditor in respect of:
Audit of the Company’s annual accounts
Audit of the Company’s subsidiaries
Staff costs (see note 21)
Operating leases – land and buildings
4
Financial income and expenses
Finance income
Bank interest received
2015
£
2014
£
30,708
48,185
5,389
–
8,500
6,000
14,000
11,500
1,063,817 1,029,306
80,813
77,596
2015
£
761
2014
£
406
22
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
5
Taxation
The tax charge comprises:
Current tax
Prior period adjustment
Current year
Deferred tax (see note 6)
Current year
Total tax charge in the statement
of comprehensive income
Factors affecting the tax charge for the year
2015
£
2014
£
(923)
234
51,161
104,779
50,238
105,013
17,741
(15,868)
17,741
(15,868)
67,979
89,145
Profit on ordinary activities before taxation from continuing operations
383,216
504,841
Profit on ordinary activities before taxation multiplied by standard rate
of UK corporation tax of 20.75% (2014: 23%)
Effects of:
Non deductible expenses
Depreciation, impairment losses and disposals
Capital allowances
Share-based payment
Share options exercised
Marginal relief
Prior period adjustment
Current tax charge
79,517
116,113
1,204
(1,114)
7,490
11,863
(7,938)
(11,617)
–
3,424
(28,645)
(12,167)
(467)
(1,723)
(923)
234
(29,279)
(11,100)
50,238
105,013
The Group has estimated losses of £375,762 (2014: £375,762) available to carry forward against future trading
profits. These losses are in Aeorema Communications plc which is not currently making taxable profits as all
trading is undertaken by its subsidiary Aeorema Limited.
23
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
6
Deferred taxation
Property, plant and equipment temporary differences
Temporary differences
At 1 July
Transfer to Statement of Comprehensive Income
At 30 June
2015
£
2014
£
(8,296)
(5,174)
14,700
29,319
6,404
24,145
24,145
8,277
(17,741)
15,868
6,404
24,145
The deferred tax asset is expected to be utilised given the return to profitability and future trading prospects.
7
8
Profit attributable to members of the parent company
As permitted by section 408 of the Companies Act 2006, the parent Company’s Statement of Comprehensive
Income has not been included in these financial statements. The retained profit for the financial year of the
holding company was £310,444 (2014: £59,674).
Earnings per ordinary share
Basic earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the
weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the profit or loss attributable to owners of the parent by the
weighted average number of ordinary shares outstanding during the year plus the weighted average number of
ordinary shares that would have been issued on the conversion of all dilutive potential ordinary shares into
ordinary shares.
The following reflects the income and share data used and dilutive earnings per share computations:
Basic earnings per share
Profit for the year attributable to owners of the Company
Basic weighted average number of shares
Dilutive potential ordinary shares:
Employee share options
Diluted weighted average number of shares
2015
£
2014
£
315,237
415,696
8,958,044 8,276,021
392,456
850,380
9,350,500 9,126,401
24
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
9
Intangible fixed assets
Group
Cost
At 1 July 2013
At 30 June 2014
At 30 June 2015
Impairment and amortisation
At 1 July 2013
At 30 June 2014
At 30 June 2015
Net book value
At 1 July 2013
At 30 June 2014
At 30 June 2015
Goodwill
£
2,728,292
2,728,292
2,728,292
2,363,138
2,363,138
2,363,138
365,154
365,154
365,154
Goodwill arose for the Group on consolidation of its subsidiary company, Aeorema Limited.
Impairment – Aeorema Limited
Goodwill has been tested for impairment based on its future value in use. Future value has been calculated on a
discounted cash flow basis using the 2015 budgeted figures as approved by the Board of Directors extended for a
period to 5 years and discounted at a rate of 10%. It has been assumed that future growth will be at 1.5%. Using
these assumptions, which are based upon past experience, there was no impairment in the year.
Management has assessed the sensitivity of the recoverable amounts in the key assumptions to be as follows: a
five percentage increase in the discount rate would reduce the recoverable amount by £292,306 and a one
percentage fall in future growth would reduce the recoverable amount by £352,473. However, in both cases there
would still be no indication of impairment of goodwill.
25
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
10 Property, plant and equipment
Group
Cost
At 1 July 2013
Additions
At 30 June 2014
Additions
Disposals
At 30 June 2015
Depreciation
At 1 July 2013
Charge for the year
At 30 June 2014
Charge for the year
Eliminated on disposal
At 30 June 2015
Net book value
At 1 July 2013
At 30 June 2014
At 30 June 2015
Leasehold land
and buildings
£
Fixtures, fittings
and equipment
£
24,034
–
24,034
17,761
(24,034)
17,761
5,201
16,104
21,305
4,108
(24,034)
1,379
18,833
2,729
16,382
815,199
44,462
859,661
26,024
(583,741)
301,944
762,860
32,081
794,941
26,600
(568,350)
253,191
52,339
64,720
48,753
Total
£
839,233
44,462
883,695
43,785
(607,775)
319,705
768,061
48,185
816,246
30,708
(592,384)
254,570
71,172
67,449
65,135
26
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
11 Non-current assets – Investments
Company
Cost
At 1 July 2013
Increase in respect of share based payments
At 30 June 2014
Increase in respect of share based payments
At 30 June 2015
Provision
At 1 July 2013
At 30 June 2014
At 30 June 2015
Net book value
At 1 July 2013
At 30 June 2014
At 30 June 2015
Shares in subsidiary
£
3,232,520
14,889
3,247,409
14,884
3,262,293
2,694,213
2,694,213
2,694,213
538,307
553,196
568,080
Holdings of more than 20%
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertakings
Aeorema Limited
Twentyfirst Limited
Country of
registration or
incorporation
England and Wales
England and Wales
Shares held
Class
Ordinary
Ordinary
%
100
100
The principal activity of these undertakings for the last relevant financial year was as follows:
Company
Aeorema Limited
Twentyfirst Limited
Principal activity
Provision of business communication services
Dormant
27
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
12 Trade and other receivables
Trade receivables
Related party receivables
Other receivables
Group
Company
2015
£
2014
£
1,055,898 1,401,432
2015
£
–
2014
£
–
–
–
323,447
353,337
19,230
19,084
–
–
Prepayments and accrued income
277,270
55,405
4,688
4,536
1,352,398 1,475,921
328,135
357,873
All trade and other receivables are expected to be recovered within 12 months of the end of the reporting period.
The fair value of trade and other receivables is the same as the carrying values shown above.
At the year end, trade receivables of £284,944 (2014: £344,096) were past due but not impaired. These relate to
a number of customers for whom there is no significant change in credit quality and the amounts are still
considered recoverable. The ageing of these trade receivables is as follows:
Less than 90 days
More than 90 days
13 Cash and cash equivalents
Bank balances
Cash and cash equivalents
Group
2015
£
2014
£
284,944
317,802
–
26,294
284,944
344,096
Group
Company
2015
£
2014
£
2015
£
2014
£
1,558,453 1,620,895
657,873
734,628
1,558,453 1,620,895
657,873
734,628
Cash and cash equivalents in the statement of cash flows
1,558,453 1,620,895
657,873
734,628
28
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
14 Trade and other payables
Trade payables
Related party payables
Taxes and social security costs
Other payables
Group
Company
2015
£
2014
£
2015
£
2014
£
685,375
902,860
2,878
1,656
–
–
67,355
67,355
187,778
301,004
33,543
43,842
–
–
1,369
–
Accruals and deferred income
556,808
341,301
15,872
19,350
1,463,504 1,589,007
86,105
89,730
All trade and other payables are expected to be settled within 12 months of the end of the reporting period. The
fair value of trade and other payables is the same as the carrying values shown above.
15 Share capital
Authorised
2015
£
2014
£
28,000,000 Ordinary shares of 12.5p each
3,500,000
3,500,000
Allotted, called up and fully paid
At 1 July 2013
Issue of shares
At 30 June 2014
Issue of shares
At 30 June 2015
See note 22 for details of share options outstanding
Ordinary
shares
Number
£
8,037,500
1,004,688
600,000
75,000
8,637,500
1,079,688
413,000
51,625
9,050,500
1,131,313
29
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
16 Share Premium
At 1 July 2013
At 30 June 2014
Issue of shares
At 30 June 2015
Share premium represents the value of shares issued in excess of their list price.
17 Merger reserve
At 1 July 2013
At 30 June 2014
At 30 June 2015
Share Premium
£
–
–
7,063
7,063
Merger reserve
£
16,650
16,650
16,650
In accordance with section 612 of the Companies Act 2006, the premium on ordinary shares issued in relation to
acquisitions is recorded as a merger reserve. The reserve is not distributable.
18 Other reserve
At 1 July 2013
Exercise of options
At 30 June 2014
Allotment of shares
At 30 June 2015
Subscriptions received reserve
£
–
19,500
19,500
(19,500)
–
On 16 June 2014 104,000 share options were exercised and fully paid for at 18.75p each. The shares were
allotted on 2 July 2014. For the earnings per share note these shares are treated as issued on the exercise date.
The reserve was fully transferred out by 30 June 2015. The reserve is not distributable.
30
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
19 Financial commitments
Total future minimum lease payments under non-cancellable operating lease rentals are payable as follows:
Group
Not later than one year
Later than one year and not later than five years
20 Directors’ emoluments
The remuneration of Directors of the Company is set out below.
Land and Buildings
2015
£
2014
£
91,000
10,417
106,167
–
P Litten
G Fitzpatrick
M Hale
S Garbutta
R Owen
S Quah
Salary,
bonus or
fees
2015
£
Salary,
bonus or
fees
2014
£
Pensions
2015
£
Pensions
2014
£
Total
2015
£
Total
2014
£
78,333
65,000
45,993
59,834
124,326
124,834
46,667
52,885
45,993
59,834
92,660
112,719
–
7,500
7,500
–
3,000
7,500
132,000
133,000
–
–
–
–
–
–
–
–
–
7,500
7,500
–
3,000
7,500
132,000
133,000
272,000
261,385
91,986
119,668
363,986
381,053
The share options held by directors who served during the year are summarised below:
Name
Grant date
Number
awarded
Exercise
price
Earliest
exercise price
Expiry date
S Quah
25 April 2013
300,000
16.50p
25 April 2016
24 April 2023
On 21 October 2014, S Quah exercised 300,000 share options with an exercise price of 12.5p each. The gain on
these shares amounted to £132,000. The net value of shares received under the long term incentive scheme was
£169,500.
Fees for S Garbutta are charged by Harris & Trotter LLP, a firm in which he is a member. See note 23.
Some directors were awarded a bonus in the year. S Quah was awarded a bonus of £30,000 (2014: £38,000) and
P Litten was awarded a bonus of £20,000 (2014: £15,000).
31
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
21 Employee information
The average monthly number of employees (including directors) employed by the Group during the year was:
Number of employees
Administration and production
2015
Number
19
2014
Number
19
The aggregate payroll costs of these employees charged in the Statement of Comprehensive Income was as
follows:
Employment costs
Wages and salaries
Social security costs
Pension costs
Share-based payments
2015
£
2014
£
874,703
821,680
81,972
92,258
14,884
72,897
119,840
14,889
1,063,817
1,029,306
22 Share-based payments
The Group operates an EMI Share option scheme for key employees. Options are granted to key employees at an
exercise price equal to the market price of the Company’s shares at the date of grant. Options are exercisable
from the third anniversary of the date of grant and lapse if they remain unexercised at the tenth anniversary or
upon cessation of employment. The following option arrangements exist over the Company’s shares:
Date of grant
Exercise price
Exercise period
From
To
28 October 2004
18.75p
28 October 2007
27 October 2014
Number
of options
2015
–
–
Number
of options
2014
9,000
300,000
20 July 2013
19 July 2020
25 April 2016
24 April 2023
300,000
300,000
300,000
609,000
20 July 2010
25 April 2013
12.5p
16.5p
32
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
22 Share-based payments continued
Details of the number of share options and the weighted average exercise price outstanding during the year are as
follows:
Weighted
average
exercise
price
2015
£
Number
of options
2015
Number
of options
2014
Outstanding at beginning of the year
609,000
0.15
1,613,000
Lapsed during the year
Exercised during the year
Outstanding at end of the year
–
–
(300,000)
(309,000)
300,000
0.13
0.17
(704,000)
609,000
Exercisable at the end of the year
–
–
309,000
Weighted
average
exercise
price
2014
£
0.11
(0.13)
(0.13)
0.15
0.13
The exercise price of options outstanding at the year-end was £0.165 (2014: ranged between £0.125 and
£0.1875) and their weighted average contractual life was 7.8 years (2014: 7.7 years).
Equity-settled share-based payments are measured at fair value at the date of grant. The fair value as determined
at the grant date of equity-settled share-based payments is expensed on a straight line basis over the vesting
period, based on the Group's estimate of shares that will eventually vest. The estimated fair value of the options is
measured using an option pricing model. The inputs into the model are as follows:
28 October 2004
20 July 2010
25 April 2013
Grant date
Model used
Share price at grant date
Exercise price
Contractual life
Risk free rate
Expected volatility
Expected dividend rate
Binomial
16.25p
18.75p
10 years
6%
43%
0%
Fair value option
5.9868p
Black-Scholes
Black-Scholes
8.75p
8.75p
10 years
0.5%
100%
0%
7.779p
16.5p
16.5p
10 years
0.5%
104%
0%
14.889p
The expected volatility is determined by calculating the historical volatility of the company’s share price over the
last three years. The risk free rate is the office Bank of England base rate.
The Group recognised the following charges in the Statement of Comprehensive Income in respect of its share-
based payment plans:
Share-based payment charge
2015
£
2014
£
14,884
14,889
33
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
23 Related party transactions
The Group has a related party relationship with its subsidiaries and its directors. Details of transactions between
the Company and its subsidiaries are as follows:
Amounts owed by subsidiaries
Total amount owed by subsidiaries
Amounts owed to subsidiaries
Total amount owed to subsidiaries
The compensation of key management (including directors) of the Group is as follows:
Short-term employee benefits
Post-employment benefits
Share based payment expense
2015
£
2014
£
323,447
353,337
67,355
67,355
2015
£
2014
£
302,076
297,687
91,986
14,884
119,668
14,889
408,946
432,244
Harris and Trotter LLP is a firm in which S Garbutta is a member. The amounts charged to the Group for
professional services is as follows:
Harris and Trotter LLP – charged during the year
Aeorema Communications plc
Aeorema Limited
2015
£
15,250
29,390
44,640
2014
£
15,000
22,325
37,325
34
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
24 Cash flows
Cash flows from operating activities
Profit after taxation
Tax expense recognised in Consolidated Statement
of Comprehensive Income
Depreciation
Profit on disposal of property, plant and equipment
Share-based payment
Dividends received by the Company
Finance income
Group
Company
2015
£
2014
£
2015
£
2014
£
315,237
415,696
310,444
59,674
67,979
89,145
30,708
48,185
5,389
–
14,884
14,889
–
–
–
–
–
–
–
–
–
–
(400,000)
(130,000)
(761)
(406)
(268)
(250)
433,436
567,509
(89,824)
(70,576)
Increase / (decrease) in trade and other payables
(132,788) 454,498
(3,624)
(192,351)
(Increase) / decrease in trade and other receivables
123,523 (869,364)
29,737
110,589
(Increase) / decrease in inventories
Taxation paid
2,674
–
(42,951)
(43,418)
–
–
–
–
Cash generated / (used) from operating activities
383,894
109,225
(63,711)
(152,338)
25 Financial instruments
The Group is exposed to risks that arise from its use of financial instruments. There have been no significant
changes in the Group’s exposure to financial instrument risk, its objectives, policies and processes for managing
those from previous periods. The principal financial instruments used by the Group, from which financial
instrument risk arises, are trade receivables, cash and cash equivalents and trade and other payables.
Credit risk
Credit risk arises principally from the Group’s trade receivables. It is the risk that the counterparty fails to
discharge its obligation in respect of the instrument. The maximum exposure to credit risk at 30 June 2015 was
£1,055,898 (2014: £1,401,432). Trade receivables are managed by policies concerning the credit offered to
customers and the regular monitoring of amounts outstanding for both time and credit limits. At the year end, the
credit quality of trade receivables is considered to be satisfactory.
35
Notes to the Consolidated Financial Statements continued
For the year ended 30 June 2015
25 Financial instruments continued
Liquidity risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due. The Group’s policy is to meet its liabilities when they
fall due. The Group monitors cash flow on a regular basis. At the year end, the Group has sufficient liquid
resources to meets its obligations of £1,463,504 (2014: £1,589,007).
Market risk
Market risk arises from the Group’s use of interest bearing financial instruments. It is the risk that the fair value of
future cash flows of a financial instrument will fluctuate. At the year end, the cash and cash equivalents of the
Group was £1,558,453 (2013: £1,620,895). The Group ensures that its cash deposits earn interest at a
reasonable rate.
Capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
while maximising the return to stakeholders. The capital structure of the Group consists of equity attributable to
equity holders of the parent, comprising issued share capital, reserves and retained earnings as disclosed in the
Group Statement of Changes in Equity. At the year end, total equity was £1,884,040 (2014: £1,967,231).
Fair value of financial assets
The Group's book value of the financial assets equates to their fair values.
26 Pension costs defined contribution
The Group makes pre-defined contributions to employees' personal pension plans. Contributions payable by the
Group for the year were £92,258 (2014: £119,840). At the end of the reporting period £30,000 (2014: £24,998)
of contributions were due in respect of the period. The amounts were paid subsequent to the end of the reporting
period.
27 Dividends
On the 21 November 2014 a final dividend of 2 pence per share and a special dividend of 3 pence per share
(total dividend £452,500) was paid to holders of fully paid ordinary shares.
In respect of the current year, the directors propose that a final dividend of 3 pence per share be paid to
shareholders on 27 November 2015. The dividends are subject to approval by shareholders at the Annual
General Meeting and have not been included as liabilities in these consolidated financial statements. The
proposed dividends are payable to all shareholders on the Register of Members on 6 November 2015. The total
estimated dividend to be paid is £271,515. The payment of this dividend will not have any tax consequences for
the Group.
28 Control
There is no overall controlling party.
36
Notice of Annual General Meeting
Aeorema Communications plc (Incorporated and registered in England and Wales with company number 4314540)
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Aeorema Communications plc will be held at Moray
House, 23-31 Great Titchfield Street, London W1W 7PA on 23rd November 2015 at 10.30 a.m. for the transaction of
the following business:
As Ordinary Business to consider and, if thought fit, pass the following resolutions which will be proposed as Ordinary
Resolutions:
1. To receive and adopt the report of the directors of the Company and the audited accounts for the Company for the
year ended 30 June 2015.
2. To re-appoint Steven Quah as a Director of the Company, who retires in accordance with article 122 of the
Company’s Articles of Association.
3. To re-appoint Michael Hale as a Director of the Company, who retires in accordance with article 122 of the
Company’s Articles of Association.
4. To re-appoint Baker Tilly UK Audit LLP, whose name will change to RSM UK Audit LLP as auditors of the Company
and to authorise the Directors to fix their remuneration.
5. To declare a final dividend on the ordinary shares of 12.5 pence each in the capital of the Company for the year
ended 30 June 2015 of 3 pence per ordinary share.
As Special Business to consider and, if thought fit, pass the following resolutions of which Resolutions 6 and 7 will be
proposed as Ordinary Resolutions and Resolution 8 will be proposed as a Special Resolution:
6. That the Company be and is hereby generally and unconditionally authorised in accordance with Section 701 of the
Companies Act 2006 (the “Act”) to make market purchases (within the meaning of Section 693(3) of the Act) on
the AIM Market of the London Stock Exchange plc of ordinary shares of 12.5 pence each in the capital of the
Company (“Ordinary Shares”) provided that:
(i)
the maximum number of Ordinary Shares hereby authorised to be purchased is 1,190,625 Ordinary Shares;
(ii) the minimum price which may be paid for an Ordinary Share is 1 pence;
(iii) the maximum price which shall be paid for an Ordinary Share shall be an amount equal to 105 per cent. of the
average middle market quotations taken from the AIM Appendix to the Daily Official List of the UKLA for the five
business days immediately preceding the day on which the Ordinary Share is contracted to be purchased;
(iv) unless renewed the authority hereby conferred shall expire on the earlier of the Company’s Annual General
Meeting in 2016 or eighteen months from the passing of this Resolution unless such authority is renewed,
varied or revoked prior to such time; and
(v) the Company may make a contract or contracts to purchase Ordinary Shares under the authority hereby
conferred prior to the expiry of such authority which will or may be executed wholly or partly after the expiry of
such authority and may make a purchase of Ordinary Shares in pursuance of any such contract or contracts.
7. That the directors of the Company be generally and unconditionally authorised pursuant to and in accordance with
section 551 of the Act to exercise all the powers of the Company to allot shares in the Company and/or to grant
rights to subscribe for, or to convert any security into, shares in the Company (“Rights”) up to a maximum nominal
amount of £1,000,000, provided that this authority shall expire at the end of the next annual general meeting of the
Company to be held after the date of the passing of this Resolution or, if earlier, fifteen months from the date of the
passing of this Resolution save that the Company may prior to the expiry of such period make any offer or
agreement which would or might require shares to be allotted or Rights to be granted after such expiry and the
directors of the Company shall be entitled to allot shares in the Company and to grant Rights pursuant to any such
offer or agreement as if this authority had not expired.
37
Notice of Annual General Meeting continued
Aeorema Communications plc (Incorporated and registered in England and Wales with company number 4314540)
8. That, subject to the passing of Resolution 7 set out above, the directors of the Company be empowered pursuant to
section 570 of the Act to allot equity securities (within the meaning of section 560 of the Act) for cash pursuant to
the authority conferred on them by Resolution 7 above, as if section 561(1) of the Act did not apply to such
allotment provided this power shall be limited to:
(i)
the allotment of equity securities in connection with a rights issue, open offer or other offer of equity securities
open for acceptance for a period fixed by the directors of the Company to holders of equity securities on the
register on a fixed record date where the equity securities respectively attributable to the interests of such
holders are proportionate (as nearly as may be practicable) to their respective holdings of such equity securities
or in accordance with the rights attached thereto (but subject to such exclusions or other arrangements as the
directors of the Company may deem necessary or expedient in relation to treasury shares, fractional entitlements
or legal or practical problems under the laws of, or the requirements of any recognised body or stock exchange
in, any territory or by virtue of shares being represented by depositary receipts or any other matter); and
(ii) the allotment to any person or persons (otherwise than pursuant to sub-paragraph (i) of this Resolution above)
of equity securities up to an aggregate nominal amount of £1,000,000;
provided that the power given by this Resolution shall expire at the end of the next annual general meeting of the
Company to be held after the date of the passing of this Resolution or, if earlier, fifteen months from the date of the
passing of this Resolution, save that the directors of the Company shall be entitled to make offers or agreements before
the expiry of such power which would or might require equity securities to be allotted after such expiry and the directors
of the Company shall be entitled to allot equity securities pursuant to any such offers or agreements as if the power
conferred hereby had not expired.
By order of the Board
Stephen Haffner
Company Secretary
Registered Office:
64 New Cavendish Street
London W1G 8TB
Dated: 20 October 2015
Notes:
(1) A member entitled to attend and vote at the above-mentioned annual general meeting (the "Meeting") is entitled to
appoint a proxy or proxies to exercise any or all of his rights to attend, speak and vote at the Meeting instead of him.
All members are entitled to attend and vote at the Meeting, whether or not they have returned a form of proxy.
(2) A Form of Proxy is enclosed for your use, if desired. The instrument appointing a proxy must reach the Company’s
registrars, Capita Asset Services, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU not less
than 48 hours before the time of holding of the Meeting.
(3) Pursuant to Regulation 41 of The Uncertificated Securities Regulations 2001, the Company specifies that only those
members of the Company on the register 48 hours before the time set for the Meeting shall be entitled to attend or
vote at the Meeting in respect of the number of shares registered in their name at the time. Changes to the register of
members after that time will be disregarded in determining the rights of any person to attend or vote at the Meeting.
(4) A copy of the register of Directors’ interests in shares in the Company and copies of the Directors’ service contracts
of more than one year’s duration will be available for inspection at the registered office of the Company during office
hours only on any weekday (excluding Saturdays, Sundays and public holidays) from the date of this notice until the
date of the Meeting and at the place of the Meeting for at least 15 minutes prior to and during the Meeting.
38
Company Information
Company Information
Directors
Secretary
Company number
Registered office
Financial advisers
Stockbrokers
Nominated adviser
Auditors
Solicitors
Bankers
(Non-Executive Chairman)
(Deputy Chairman and Creative Director)
(Chief Executive)
(Non-Executive)
(Non-Executive)
(Executive Director)
M Hale
P Litten
G Fitzpatrick
S Garbutta
R Owen
S Quah
S Haffner
04314540
64 New Cavendish Street
London, W1G 8TB
Harris & Trotter LLP
64 New Cavendish Street
London, W1G 8TB
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London, E14 5RB
Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London, E14 5RB
Baker Tilly UK Audit LLP
25 Farringdon Street
London, EC4A 4AB
Howard Kennedy LLP
No.1 London Bridge
London SE1 9BG
Ross & Craig
12a Upper Berkeley Street
London, W1H 7PE
Barclays Bank plc
P O Box 32106
London, NW1 2ZH
Registrar and transfer office Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
39
Notes
40
CONSOLIDATED DIRECTORS’ REPORT
AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30TH JUNE 2015
In ancient Greek drama, an apparently insoluble crisis was often
solved by the intervention of the gods who magically descended
onto the stage from the skies above.
The elaborate crane mechanisms that enabled this impressive
effect were known as aeorema.
Aeorema Communications Plc, Moray House, 23-31 Great Titchfield Street, London, W1W 7PA
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